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Saturday, November 1, 2014

It is November and only 40% of the soybeans are planted in Mato Grosso vs
75% normally.

We have been getting some rains. But rains are light. In recent years, rains
tend to set in and last all day by this time of year. It is fine for now, but sure
is weird. If rains would be like this in early January when crop needs lots of
water per day, we have a problem.

Vegetative index year over year shows an expansion of the drought.

The soybean crop size of 95 to 98 mmt is now gone.
Those who forecast a mega crop will soon be dropping their numbers.

The range is now 89-94 mmt. I am in this camp.

The crop will be planted in the next two weeks.

Insects and caterpillars are already being sprayed for 20 days after
planting.

The key to the 2015 soybean and corn crops now hinge on the harvest
window from Feb 20th through March 15th. The weather at this time will
determine everything.

If a wet weather scenario would set in during February, very little 2nd crop
corn will be planted. If it is planted, it will be for cover crop purposes and
not for harvest.

Some have said a 40% drop in Mato Grosso 2nd crop corn is possible.
I am not there yet.

The likely scenario will be a 20% drop in planted area and if the rains
shut off in April, another 20% whack to the yield. It might feel like
a 40% drop in a perfect storm.

Asian rust is showing up on re-growth soybeans. This drives agronomists
batty to see this so early. We know we need to spray 3 times.
There will be pressure on these soybeans from a very early stage.
Keep in mind the longest day of the year is Dec. 21. That is only
50 days away. Soybean growers know what this can mean.

This is a whacky year. Some say the Amazon is malfunctioning??
Maybe needs a new pump?

The pioneers of Mato Grosso have not experienced this in their young
history of 20 to 30 years from Cerrado/Forest to farmland.

It would not surprise me if we are talking about flooding by February.
Roads and bridges washed out and moldy soybeans.

The rally in Chicago and the Dollar/Real have been a godsend for many.
1.25 CME + 1 dollar forex feels like US$ 2.25/bu rally in Oct for many.
This gets many guys back in the black if we can produce an average yield.

This also means more expensive fertilizer and chemicals for 2016.
It is a catch 22. What saves you in the short run castrates you in the
longer term.

Brazil raised her interest rates to 11.25% this week. Some say 12% is next.
Here is another paradox. Brazil needs to stimulate growth with budget
deficit spending and yet slam the brakes on inflation at the same time.

In 2009/2010 Brazil lucked out with the Ben Bernanke helicopter of dollars
looking for a home or aka carry trade. Brazil had free money coming in.
No more free money. What will they do????

I will keep subscribers in the loop as I travel in Mato Grosso next week.